Silk Road Medical (SILK) 11 Nov 222022 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Silk Road Medical 2022 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to today, conference Marissa like of to would speakers your Bych. I hand over the one Now Marissa, please go ahead.

All right. call. today's Thank you for joining

Joining September Chief is company's Chief Chief me financial press results Silk Rogers, release and three released A are Buchanan, months website. copy the Lucas the ended Road Executive Medical the Financial XXXX. Officer. available Operating Officer; and on for Earlier XX, today, Officer Erica of

statements place expense performance, hiring are estimates market our physician commercial management, for financial upon approvals, development risks material reliance These you Before Any the competition statements current call not could All from results to during our Litigation the without various we future cause on are actual events based results uncertainties in future assumptions. this contained make I'd relating the events, involve these in relate forward-looking management to limitation, and and adoption, our and anticipated penetration, begin, of within performance federal of those and harbor reimbursement, product predictions trends Securities training to implied undue opportunity expansion, safe which this and remind and include organization, XXXX. meaning that statements call regulatory forward-looking are and and growth international statements of to Accordingly, laws, expectations Act or forward-looking by made Reform should including statements. statements that pursuant statements. to you Private that provisions or or statements. will those differ like materially the of operating these that forward-looking expectations or securities

revise only refer our Risk accurate the XXXX. Securities information risks associated call with of This X, projections to X, our Officer. that, because except is on time new November any section conference Executive forward-looking law financial any disclaims and intention Form Erica over I list and Chief of XXXX. Silk with a Road or With today, call business, and information, description or or Commission as turn and live the Rogers, Exchange August filed will obligation statements by or of otherwise. report required quarterly the update on contains as the broadcast the to XX-Q For Factors events uncertainties sensitive Medical future please of to

for Thank you, all Marissa. you afternoon, joining Good thank and us.

we enabling Two growth, representing $XX.X pre-announced, procedures year-over-year million quarter the performance. by XX% XX% aligned of achieved revenue our in substantial exceptional third respectively. buoyed X,XXX over and first-time the drivers As for TCAR

more began the paving an early environment. health relatively normal the full artery second, way momentum disease carotid utilization. marking TCAR ongoing stages for operating adoption a care And the and treatment in we exciting trend addressable of was in First executing market against U.S. and

annually label U.S. comes diagnoses execution all surgical Medicare $X.X patients. for on commercial XXX,XXX this in over estimate open coverage recent be include of eligible We strong to These a procedures Our in expansions standard use the to approximately representing FDA and up risk heels addressable the and TCAR. market opportunity of XXX,XXX our for the patients billion achievements TCAR

adoption carotid tracking highlighting feedback patients our is our enables Momentum superior patient and commitment experienced after risk every and Our screening we may of and surgery results directly doesn't building faces comparing complication artery are to TCAR by and a population. see shift approach media expanded sentiment TCAR first into surgical fact and patients It increased paradigm of patients the and patients palpable. in We they rather standard invasive that evidence And field patient patients while on positive is care for level minimally all first our the individual through their direct patient home a seven remains consider website their factors. life sales our maintain their disease users of TCAR first their risk more than we shift to care. and over risk of This as label unique with the Physicians for physicians physician surgery. offers their early driving now and most bespoke clinical and now from from was this supported minimally committed quality less a presentations as targeted tangible by but begin eligible easier of high and overnight, thousands when of to patients end, sense, from in our families, strategies awareness was it's both TCAR benefits who criteria. we at in campaigns the In survey, and on open playing stories are feedback, we more TCAR. patients of portal robust customers that said choose a of TCAR, invasive and social physicians include TCAR with tens decades based And push a in early need reach suitability protectionfromstroke.com. patient than that to CEA time broader our clinical increasing are to TCAR we are underway recent are a surgical for procedure happen excited encouraged a utilization. many efforts towards team towards to extend invasive responders aimed the recovery a the surgical including don't testimonials evaluating physicians know invasive These drive multiple To versus real-world of days, approach. TCAR of benefit. our half for

the excellent in to Initiative publications clinical Vascular Quality with momentum VQI see XX addition, continue or publications to we coming in date. In XXXX from

patients presented of XXXX TCAR at as were Caitlin perioperative an of underwent was risk for For myocardial and example, carotid endarterectomy. of XXXX and last of use versus now carotid lower well demographic revascularization clinical significantly the as characteristics, odds infarction and for surgical the In After and the TCAR in endarterectomy VQI stroke adjusting Dr. data week just between who in stroke death standard patients. the conference, carotid analysis have over and standard the that by XXX,XXX Hicks. VIVA high surgical populations, patients of baseline concluded authors Surgery in lower been support surgical patients. data Journal in TCAR their similar Vascular than patient odds risk patients both combined published had These risk

enrollment September. as world we enrolled patient in with treatment is clinical our patients, evidence study Looking the III, surgical the standard forward, first to ROADSTER underway real upon assess risk base, designed post-approval our build robust in early of

will through a maximum single-arm patients XXX study and stroke is As research of stroke the sites plus of post post-procedure. XX endpoint leading across composite roughly days or procedure a prospective enroll XX infarction ipsilateral a from reminder, myocardial XX death, clinical day to this primary XXX

real TCAR the We to add evidence the already risk compelling standard are study forward world for clinical progresses. look prospective data patients surgical you in we updating as and to excited to

Now of I'd our commercial touch to key metrics. some upon like

to year underway. pleased sales goal sales XX I next United As the for by ongoing we exited XXXX am this a have tranche training with And active presence with majority physicians the territories. served of reminder, critical that hospital mass reps that trained the procedures a hit a in almost announce X,XXX perform territories active sales carotid we X,XXX for with in of our States in nearly accounts

XXX various we physicians, training high strong have our periods programs to of trained demand now of goal we as physicians year. past, the to for the expect react educational Regarding in to this the end to decided at we our very and exceed XXX

clearance recent the for On innovation our first fifth share Transcarotid product and our front, portfolio. Catheter Enflate the Balloon for built purpose product Dilation in pleased I TCAR the Exchange Enflate of short, the to Rapid or TCAR ENROUTE am balloon

release measurable in year, a We not of procedural TCAR revenue rolling for are market Enflate into limited XXXX next We slight broader this begin but limited do and quarter lift beyond. release from in our a do year. planning a we the revenue to launch expect this expect

we laser approvals an international presence us. System markets. into approvals received commercial important ongoing our for the we on recently ahead international towards Stent. step the These initiatives focused the We expand estimated market commercial in opportunity billion U.S. penetrating of making Neuroprotection ENROUTE progress our While remain ENROUTE to with both $X.X mark opportunity, and Japan are Shonin

define next assessing the include pathway steps and further process to Our our timeline reimbursement launch. will and study requirements, which post-market

are in stroke We progress acute our setting making also steady non-feasibility in of trial thrombectomy. the

future Although, it remains enthusiastic about early, transcarotid we've embolectomy. in here potential neuroprotection and already of investigators a lot our the about learned are our

Turning to our for XXXX. outlook

would a our are on exceed XXXX million XX,XXX our the expect performed year this represent revenue which U.S. feel for over this range we will summary, a patients commercial Stroke as our and about our burden Having With Lucas families. the will potential result their XX, Officer. in Financial recent on TCAR the label of World expansion. Chief more momentum our total with Lucas outlook year, Chief are Buchanan, procedures Day TCAR of million devastating reduce excited and for Operating In We and of provide and turn details full participated expectations to I couldn't XX% now call $XXX presence raising to thrilled we Officer and stroke to to that, share we our progress market. shortly. long-term over in recently year building be growing October to further procedure $XXX

by last given XX% ended number trends months adoption quartiles increase XXXX initial driven year. from adoption. significant was $XX.X Revenue by drives over trained procedures just of million the continued all same physician and Erica. experience of TCAR in growing million, but physician for We our and X,XXX you, over was XX% our time September primarily training prior period progress know quarters, from we year. from in the of and representing Thank increase not few TCAR years physicians to base, the per years. increase Adoption procedures are same in about durable $XX.X the period a quarter a future three the the training. the XX, growing excited measured Growth was of prior across the The as

As third surgical a them users was remaining for our risk to patient. and of successfully across We quarter anticipated, physician third a the base. in many XXXX. XX%, the XXXX our already performed greenfield in of early top opportunity standard TCAR see of are equal quarter leaning Gross significant have margin trained

facility, Minnesota the costs by While our the these year. overhead volume with costs we associated took increased increased offset partially last same were period relative on to manufacturing

expenses third in for R&D XXXX. costs. $X.X to our travel XXXX. in continued and spending third gross of R&D of XXXX. general XXXX. we quarter, of with $X.X for personnel thereby the we year. margin sold investments environment commercial and goods SG&A was more standard capitalized million million compared in coming expense higher the our standard in revalue increase our that as The additional Total of quarter million ENROUTE in this spending the development in an increase into full we product Minnesota $XX.X quarter the as cost by The expenses in for personnel were facilities last growth the necessitated Additionally, quarter normalized as of now decreasing benefiting this third costs year online to for The the driven of in and third million, million in was and expenses revaluation third in resulted as production inventory to in $XX.X balances the driven continue ongoing relative compared $XX growth $XX.X primarily increase margin to to XX% by Neuroprotection the clinical well operating programs. quarter. a XXXX online quarter third manufacturing lower administrative gross With a increase quarter XXXX were of slightly System, million expect XXXX in for compared XXXX quarter in were third expenses two Sales, from

funding short-term sheet $XXX.X quarter to or QX. of investments million million, our expect recently business expenses our period ended flexibility pleased prior loss as $XX.X Net same This the provides compared total have and equivalents bolstered per growth of to balance quarter loss a $X.XX the initiatives. million a cash, continue of third per share balance almost We million share for our touching the was the of are equity upon additional sequential increase financing, for $X.XX of of net progress. through modest substantial We operating or in and which year. a a loss $XXX XX. to the with a completion $XX.X into in of closed to our follow-on and fully net cash and in commercial support Quickly on we very proceeds added sheet October loss

bring would anticipate X,XXX. exceeding to XXX which XX points our continue in efforts, trained continue we physicians that important sales commercial territories and As to prior reaching high end of have we for XXX of our driver our our to the more XXXX, With physicians engagement base goal expansion see physician Erica total guidance XX team mentioned, hit we active newly an to to is and adoption. over touch we with trained drive increased of

in We growth for have now quarter procedures sequential X straight per per seen physician quarters.

front, in a platform excellence as to scale On our we drive future eye making with the operational meaningful toward of becoming operations and care. TCAR the of standard investments are an we

Our Minnesota System resiliency. September California. alongside of and a units enables production manufacturing as The our in in commercial new capacity are manufacturing facility manufacturing Neuroprotection existing operations operations substantial in officially online now ENROUTE with in step-up

continue and in suppliers team's our which has manage proud pressures. growth as with XXXX support That issues longer our with continue very other future. Closing as guidance. to revenue We manufacturers, be with into and of a to being supply well to-date vendors, work and operating I'm our ability risk leverage chain. manifested throughout the cost vendors times manage material said, contract and lead and our related also closely to to challenge Labor our mitigate our component drive

core mentioned, range with of growth million revised As to XXXX $XXX full we year-over-year to Commensurate revenue our now $XXX XX,XXX over we procedures year of XX%. to implying the anticipate million in over year be penetration XXXX now Erica XX% be outlook, full to expect representing XX% market. the of

tailwinds adoption environment. label therapy utilization a physician the normalized health recent growing by as strong performance and driven continued our greater Our our by revised operating in year-to-date efforts our to of result from drive for accounts guidance supplemented care more system expansion

remains growth this provide are we Erica and expansion surgical that, said year, our gradual not beyond and standard hand that in effect I comments. closing to beyond for to layering a With XXXX While it her intact. we expectation risk we have guiding to will expect back label

Minnesota. close Thank KOL we you, new dialog the to Plymouth, at like hosted several clear. with a physicians of Across two Lucas. from our event reflecting on by I'd were levels experience, in recently varying themes facility

decision-making efficacy focus. associated with on and the First, in safety, clinical data invasive the immense importance the of patient second, and with satisfaction TCAR minimally importance evidence And high based of nature TCAR.

patients, toward as we about our the reach care. themes up As the benefits to steadily TCAR of TCAR and we these we questions. resonate approach training physicians standard continue to educating will widen we and With of more Operator? will are confident line driving that, open the

we [Operator question will of Thank of line Marcus Robbie you. time, And with Please first your session. At conduct proceed a our the Instructions] JPMorgan. question. from this question-and-answer comes

at color for kind implies us fourth this. to for more into and one-time anything related that Hi. was stepdown give Roman or there is this you on first is planned was comment on a could quarter could if XQ the in wondering quarter in My of (ph) nature this that Thanks. guidance updated just Robbie. This year. It question the for just midpoint I

to a bit one there. Sure. color give little that I'm take and more happy

note in pockets and kind season, throughout I physician you continued to accounts revenue expect COVID state our and the of holiday to some think recovery So an some staffing of day that important it's we stack typical by extent, of flu uncertainty and per metrics of kind in and a the increases those slightly as fewer kind continued Florida. shortages days lesser and offset hurricane friction uncertainty seasonality up and per country, important to also the And guidance in selling of for in types QX QX. relative do procedures

point is momentum gets and overall, those of out some us and to the midpoint But business so takes. flattish the at as puts the are in the And you roughly that strong.

year I is in then about what providing contribution XXXX? should adoption next be And from just obviously guess are of without guidance, and formal Enflate? another of kind sort question how growth you And expecting we thinking

Can question. your of part repeat first that? the missed I you

Yeah, sorry.

Enflate. from contribution the With

Okay. Got it.

remarks, So inventory products. margin in from flagship TCAR a all accessories gross kind said very start that therapy. think ASP lineup the launch stent of and third we add to the the the we'll Obviously devices an three and speedies system the we the QX say it in remain perspective, QX. adoption The we're have drivers on about is, now to and up to the here on at The accessory way call. convenience the more it's the as and neuroprotection in the prepared but the limited balloon, building are will important and of of of

lift from the we'll release will in there bit XXXX. to and then trends market about so broader learn procedure And little early and opportunity a a of revenue release kind market the per into modest be the later utilization

come that to front. more on So

Great. Thank you.

Robert question you, Wise to with come Thank is of Stifel. Rick from going Rick, question. proceed next Our [Operator (ph). please Instructions] your

very much. you you at feel the of are like and times Thank point. that the your start this at really sort supports with I of start I've call a off inflection Erica, maybe many idea just commentary asked an we question

by encouraged momentum the really sand the significant doctors the and building, from accelerating are removed TCAR we use. is said Is their gears can moment here? early acceleration You're expect you where from you've results, many this

remarks, this the they think as criteria TCAR I excited no around their set longer joining be label market couldn't qualifies broader physicians risk to is think about giving stand patient. we more surgical and my us first and where you that of around Look, Hi, as standard have we for where the us. pleased And the in this with to access first today patient surgical getting heard are Thanks particular coverage Rick. what of questions opportunity. full for risk expansions as all,

will. there's That own from sand each there from and layering said always you a well training And And the individual adoption, and that gears, as still two effect has kind and physician is of professional. thirdly, their kind of or points a we've are touch that crescendo reason significant time of said, the removed number of growing said a we from gradual course of the is inflection gradual important if the pieces point. age to sales for being so surgeon

So entire all a characterize the same than all add up fish of this of we time. those as what would things layered at rather effect of to school the switching kind

a one quarter I about the Maybe much revaluation? know, maybe you the see to would margin. have should And little inventory margins the I contribution gross fourth color as quarter don't be if platform us gross Lucas. think you, would margin How normalized in thinking you. How gross Got because about for on frame from here? just you from how a more next asking about year.

we Sure. I'll had throughout part QX, expenses kind aberrant had of in Omicron, with calendar reasons. accounting different the inventory it of were more will year. gross the sick into and our we somewhat workforce and P&L on out previously sheet QX this context production put this normalized Thanks, margin capitalized somewhat the were were of be of going QX, the and was QX whereas that slightly kind in Rick. QX through QX balance normalized. for where methodology more

against price XXXX up we and beyond capacity gain customer and that the fixed we'll now assuming we'll we've to QX think they're the kind costs have And control I two overhead, obviously facilities opportunity we as QX supply margin. and on in you side. increase of get so year, the to invested and to control gross on going looked volume into the the if And significantly and guide running. unit side in resiliency and normalized further chain forward to the full a can And as

announcing longer recent in If your here. how In about I at more looked thoughts sneak your not transaction, of unexpected use proceeds and would you could you one them.

flexibility. your next through much. your force least was The sort sales your your But and you're expansion sales Thank at in you this think the what's is you I'm new greater financial that telling for sure with increasing expansion, R&D. Help now investment first of here, operations, moment the remember facility priorities us so is us done. place, from priorities list.

of then it's and for And of into to technologies foremost north the regulatory Well, And clinical on It Sure. it's is a primarily efficient. growth is commercial disease carotid list portfolio continue drivers, have you transcarotid many going But "nearby" and the innovating is market. opportunity, touched iterating south carotid. broader more the and states focus our so first the intellectual TCAR on. have expansion. and the obviously, which core team spend leveraging side, of capital the U.S. whole we things relatively global competencies and we the of property long-term core and R&D

us progress to earlier how those the opportunity, equity the push all quickly So quarter continue recent a financing spend lot deliberate across same. financial debt business about add that this and very OpEx the we're was but was we be just dimensions. investment first we the being not it roughly where financing areas than and year And when quarter for forward. those this of we this revenue, where and as greater give And obviously as was make flexibility I'll also

made into line. having a we're of to the top so investments to-date, investments a looking forward growing against leveraging lot future those And

Thank you.

Thank you, Rick.

have a will moment. of you come question from just Piper the will Maeder Sandler. Adam, in next line Our Adam

Hopefully and end days, at growth like puts the to progress. guys. a I start, on the and Thank wanted circle you can I guide. questions Hi, think seasonality. even headwinds guide, for you low-single taking of quarter-over-quarter. back hear I congrats digit and takes talked the me, QX look to about the the QX implied you on implied only some But Lucas, Maybe holiday assumes of okay. staffing, top when it selling the

and feels seasonal historical versus pretty patterns. So conservative modest

you conservatism? or just and Thanks. a or good early context, October follow-up should provide of two. interpret month have business on that as color in the the this really any we November in degree can then So And of a I

pace variations of in where training against environments the operating the Yeah. of physician a those territory terms effects history staffing is in expansion I'm big contrast sales of our sure rapidly issues. inputs things and and and growing lack other normalized and to guide of pandemic and and business kind here not due

And in so takes with puts remarks the reiterated. and the I more the caution prepared QX we've again we that and some just by than think raised beat around mentioned you

the in it's the of so that momentum some business between and balance uncertainty. a And

understand Understood. Okay. Appreciate to level, can that color. the you product in a to that or does? exactly to TCAR going want patient up, Do I And at envision details in by you a be frame it cases that I follow be And But maybe you. about balloon ask Enflate slight us used ASP I understand specific mean slight? what all then shared what later to 'XX, date. think anatomy? up did more then, product. you could do are Thank you lift help I high at will heard a just

latter Sure. first. I'll I'll us. for the take joining Adam. take that one, part Thanks

accessory similar System. think to the convenience products the really the about into an our ENROUTE TCAR. ASP stent to continue Enflate improves the of and ease, that micro-puncture product of is and others Neuroprotection safety it an the point the of really view from speed, the said, falls Lucas to balloon category way As and The be flagship kit

will a do calibrate that should how kind the So what of ASP. we give sense Enflate for procedural you of

two in the As potentially. relates be will to utilized and used it parts the procedure kind is of balloon it rationale, how of a

physician angioplasty luminal or wants to If for the it may gain up example she a for is there gain touch like once prepare stent diameter the place, of to that be the the stent. to wants the he is furthermore, and further or lesion need there expand a a feels placing with inflation. the And lesion be then before some balloon in stent, can placed. balloon First, additional stent the to stent

in in have TCAR case. aren't they've ideal designed a vasculature use balloons but leg for in been which primarily, been peripheral using balloons the ergonomically used so And to-date use for TCAR,

balloon things procedure. getting carotid put about of a took safely and we that design into all into a know the this common bespoke we the so And that of artery for

really on if post-market I in for Japan. study. reimbursement are like just next That's and Congratulations you if more Shonin Thank that color. one sounds on don't the helpful, And sneak It could steps approval. mind Erica. approval you

model if we so dialed our you a is timing us in there. 'XX likely can XXXX Just wondering have give revenue Really question it much. the should simple you broader more contributor? any on any or Thank thoughts is into

Yeah. Sure, Adam.

first about all, of of strategy things that the study the the are commercial The approval. Japan. you as really So requirements we Japan at the it course on and approval toward a yes, know, with probably launch of starts really working progress thrilled kind and And is methodical thinking we understanding are in are submission, and now reimbursement the kind of post-market Japan. best go-to-market in

China. the to neurosurgery But market we probably compared example for or important strategically you performing us the it like As point, as which is we the relatively call know. is to said before, procedures Japan neurointerventional clinician U.S. small say a is same because

on not perhaps you that. to revenue the longer, think about in give way to so And clarity more is it's but wait we'll XXXX it and

Thank Understood. Okay. you.

Thank Erica would it remarks. I to At turn time, for Rogers like this back to you, closing Adam. some

joining much us. you couldn't again. more progress quarter. We in for our thank be the Well, pleased very Thank with third you

your program and disconnect. for you does conclude now participation conference. today's Thank This may in you the